FAQ: Is Auto Insurance Required by Law in Virginia?

Authors: Chris B. Cloude, Claims Consultant & Christopher A. Meyer, Esquire

At the personal injury law firm of Allen & Allen, we are often asked if you are required to buy motor vehicle insurance in Virginia.  Technically, the answer is no.  You are not required to purchase auto insurance on a vehicle you register in Virginia.  However, if you do not purchase auto insurance, you are required to pay an uninsured motorist fee of $500.00 per year.[1]   When you register a motor vehicle, you must indicate if the vehicle is insured or not, and pay the uninsured fee if it is not.  If the vehicle is insured, you must have liability coverage with certain minimum limits.  Liability insurance is there to protect you from claims of other people should you cause damage to someone  or their property through a negligent act.  Auto insurance also protects you if an at-fault driver injures you and does not have sufficient insurance coverage.   If you only pay the uninsured fee, this does not provide any insurance coverage to you at all.  Paying the fee only protects you from being prosecuted for the violation of driving a vehicle without any insurance coverage.

If you do purchase auto insurance, then for bodily injury coverage, the minimum limit required in Virginia is currently $25,000 per person and $50,000 per incident.[2]  This means that your insurance company will protect your assets up $25,000 per person or, if more than one person has an injury claim from the same incident, up to a maximum of $50,000 for all persons injured.  The minimum property damage coverage required if you buy auto insurance in Virginia is $20,000.  If you cause a car accident and the other person’s claim exceeds the limits of the insurance coverage, then you are “exposed” for the difference between the limits of your coverage and the amount of the claim.  The person whom you have injured may take your personal assets until their claim or claims are fully satisfied. These assets may include your home, your vehicle, your personal property, or any other assets you have.  In addition, the person you have injured or whose property you have damaged may obtain a judgment against you, which will affect your credit, and may then garnish your wages for the debt you owe them.  This is why it is VERY important to protect yourself and purchase motor vehicle insurance that will sufficiently protect your financial well-being.

What happens if you are involved in a car crash with a person that has no insurance and the collision is their fault?   If you have auto insurance on the vehicle you are driving, then in Virginia you also have a coverage called “uninsured motorist coverage”.   Virginia law says that if you purchase auto insurance, you automatically get uninsured motorist coverage, regardless of what your policy says.    Uninsured motorist coverage (or “UM coverage”) provides coverage to you if the person that caused the crash and your damages is not covered by an active auto insurance policy.   Under Virginia law, the uninsured motorist coverage has the same limits as the bodily injury liability coverage.[3]  If you only carry the Virginia required minimum coverage of $25,000 and the person that caused your damages is uninsured with no assets, you could have suffered a catastrophic injury and the most you will probably ever recover is $25,000.[4]

What about a situation in which you are involved in a crash with someone that does have auto insurance, but only carries $25,000 coverage and you suffer a catastrophic injury?  Under Virginia law, there is an insurance coverage that will protect you in such a situation.  That insurance coverage is called “underinsured motorist coverage”.   Underinsured motorist coverage (or “UIM coverage”) is also automatically included in your policy if you have auto insurance.   UIM coverage is intended to protect you from those that may not have purchased sufficient  coverage to pay your claim in full.  It’s a reward to you for having purchased higher insurance limits.  For purposes of paying your claim, it’s as if the other person has the same limit that you do.  As with UM coverage, the limits of your UIM coverage are the same as the liability limits of your auto insurance policy.[5]  For example, suppose you suffer injuries in a motor vehicle crash that is caused by someone else, and your injuries require you to be kept in the hospital for twenty days and, as a result, you have a $100,000 hospital bill.  If the person that caused the crash only has $25,000 coverage, then that is the limit that their insurance company will pay and you may well be stuck with the rest of the bill.  However, if you have an auto insurance limit of $100,000, then the other person’s insurance company will pay the first $25,000 (his limit) and then your company will pay  $75,000, so you recover $100,00 and it’s as if the other person had a $100,000 limit because that’s the amount you can recover.   That’s why choosing sufficient auto insurance limits is extremely important to help protect your financial well-being.

The same principles apply regarding property damage.[6]  Talk to your agent or insurance carrier to make sure you are protected.  Don’t be caught “exposed” or without sufficient auto insurance coverage to protect you and your family.

About the Author: Chris Cloude is a claims consultant in the Fredericksburg, Virginia office of the personal injury law firm of Allen & Allen. Chris works under the supervision of Fredericksburg personal injury attorney Edward L. Allen, helping injured victims with their accident claims including car accidents, slip and fall accidents, motorcycle crashes and pedestrian accidents.

[1] Va. Code § 46.2-706 requires every person registering a motor vehicle in Virginia to either have insurance with minimum limits issued by an approved insurance company, be a qualified self insurer (which usually means putting up a significant bond),  or pay a $500 fee.  See Va. Code § 46.2-706 at http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-706.  Another statute, Va. Code § 46.2-705, defines an “uninsured motor vehicle” as “a motor vehicle as to which there is no such bodily injury liability insurance and property damage liability insurance, or no such bond has been given or cash or securities delivered in lieu thereof, or the owner of which has not so qualified as a self-insurer.” See Va. Code §46.2-705 at http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-705.

[2] See Va .Code § 46.2-472 (which states liability insurance shall insure at least up “… to a limit exclusive of interest and costs, with respect to each motor vehicle, of $25,000 because of bodily injury to or death of one person in any one accident and, subject to the limit for one person, to a limit of $50,000 because of bodily injury to or death of two or more persons in any one accident, and to a limit of $20,000 because of injury to or destruction of property of others in any one accident.”

[3] Under Virginia law, you can choose a lower limit for UM coverage than your liability coverage if you do so in writing.  However, this is a really bad idea.  First, you usually don’t save much. Second, if someone with no insurance (or only the minimum limit of insurance) injures you or a member of your family who lives with you, and you only have the lower limit, then you won’t have enough insurance to cover your losses.

[4] For more information about the importance of having sufficient auto insurance limits, see the article in this blog at https://www.allenandallen.com/blog/how-much-auto-insurance-should-you-buy.html.

[5] See footnote 5 above.  You can choose a lower UIM coverage limit, but that’s a really bad idea and very, very few people do.

[6] Many vehicles are worth more than the minimum limit of $20,000 for property damage coverage.  If you damage another person’s vehicle and the damages exceed $20,000, then your personal assets are “exposed” for the difference.  If you run off the road and damage another person’s property, the damage may exceed the limit of $20,000.  I’ve had a number of cases where someone caused an accident and forced another driver off the road into the support for a large highway sign.  The replacement of the support and sign can easily exceed $20,000. Editor’s Note.